Arbitrage Rebate Overpayments on Tax-Exempt Bonds, 56841-56842 [2013-21879]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 78, Number 179 (Monday, September 16, 2013)]
[Proposed Rules]
[Pages 56841-56842]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-21879]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-148812-11]
RIN 1545-BK80


Arbitrage Rebate Overpayments on Tax-Exempt Bonds

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of Proposed Rulemaking and Notice of Public Hearing.

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SUMMARY: This document contains proposed regulations that provide 
guidance on the recovery of overpayments of arbitrage rebate on tax-
exempt bonds and other tax-advantaged bonds. These proposed regulations 
provide the deadline for filing a claim for an arbitrage rebate 
overpayment and certain other rules. These proposed regulations affect 
issuers of tax-exempt and tax-advantaged bonds. This document also 
provides notice of a public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by December 16, 
2013. Requests to speak and outlines of topics to be discussed at the 
public hearing scheduled for February 5, 2014, at 2 p.m., must be 
received by December 16, 2013.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-148812-11), Internal 
Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 
20044. Submissions may be hand delivered to: CC:PA:LPD:PR Monday 
through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR, 
(REG-148812-11), Courier's Desk, Internal Revenue Service, 1111 
Constitution Avenue NW., Washington, DC, or sent electronically via the 
Federal eRulemaking Portal at www.regulations.gov (IRS REG-148812-11). 
The public hearing will be held at the Internal Revenue Building, 1111 
Constitution Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Timothy Jones at (202) 622-3980; concerning submissions of comments and 
the hearing, Oluwafunmilayo (Funmi) Taylor at (202) 622-7180 (not toll-
free numbers).

SUPPLEMENTARY INFORMATION:

Background and Explanation of Provisions

    This document contains proposed amendments to the Income Tax 
Regulations (26 CFR part 1) on the arbitrage investment restrictions on 
tax-exempt bonds and other tax-advantaged bonds under section 148 of 
the Internal Revenue Code (Code) (Proposed Regulations). Section 1.148-
3(i) of the Income Tax Regulations provides that an issuer may recover 
an overpayment of arbitrage rebate and similar payments on an issue of 
tax-exempt bonds if the issuer establishes to the satisfaction of the 
IRS Commissioner that the overpayment occurred. Revenue Procedure 2008-
37, 2008-2 CB 137, provides procedures for filing claims for a refund 
of arbitrage rebate and similar payments and imposes a deadline for 
filing such claims. In particular, a claim for a refund must be filed 
no later than 2 years after the final arbitrage computation date for 
the issue from which the claim arose. A transition rule applies to 
issues with a final computation date before June 24, 2008. The Proposed 
Regulations include this 2-year limitation on filing claims as well as 
the transition rule.
    The Proposed Regulations also provide that the Commissioner may 
request additional information to support a claim, specify a date for a 
return of that information, and deny the claim if the information is 
not returned by the date specified or as extended by the Commissioner. 
Under the Proposed Regulations, if the Commissioner denies a claim 
because it was filed after the 2- year deadline or requested 
information is not received by the date specified in the request for 
such additional information, the issuer may appeal the denial to the 
Office of Appeals. If Appeals concludes the claim was timely filed or 
the requested information was timely submitted, as applicable, the case 
will be returned to the Commissioner for further consideration of the 
merits of the claim. See 26 CFR 601.601(d)(2).
    In accordance with section 7805(b)(1), Sec.  1.148-3(i)(3)(i) of 
the Proposed Regulations applies to refund claims arising from an issue 
of bonds to which Sec.  1.148-3(i) applies and for which the final 
computation date is after June 24, 2008. Issues for which the actual 
final computation date is on or before June 24, 2008, are deemed to 
have a final computation date of July 1, 2008. Section 1.148-
3(i)(3)(ii) and (iii) of the Proposed Regulations apply to refund 
claims arising from an issue of bonds to which Sec.  1.148-3(i) applies 
and for which the final computation date is after the date of 
publication of the Proposed Regulations.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866, as supplemented by Executive Order 13563. Therefore, a 
regulatory assessment is not required. It is hereby certified that 
these Proposed Regulations will not have a significant economic impact 
on a substantial number of small entities. Therefore, a Regulatory 
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. 
chapter 6) is not required. The proposed changes reaffirm or clarify 
filing deadlines previously published in other administrative guidance. 
Pursuant to section 7805(f) of the Internal Revenue Code, this 
regulation has been submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Comments and Public Hearing

    Before these Proposed Regulations are adopted as final regulations, 
consideration will be given to any comments that are submitted timely 
to

[[Page 56842]]

the IRS as prescribed in this preamble under the ADDRESSES heading. The 
IRS and the Treasury Department request comments on all aspects of the 
proposed rules. All comments will be available at www.regulations.gov 
or upon request.
    A public hearing has been scheduled for February 5, 2014, at 2 
p.m., in the IRS Auditorium, Internal Revenue Service, 1111 
Constitution Avenue NW., Washington, DC. Due to building security 
procedures, visitors must enter at the Constitution Avenue entrance. In 
addition, all visitors must present photo identification to enter the 
building. Because of access restrictions, visitors will not be admitted 
beyond the immediate entrance area more than 15 minutes before the 
hearing starts. For more information about having your name placed on 
the building access list to attend the hearing, see the FOR FURTHER 
INFORMATION CONTACT section of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the hearing must submit written or 
electronic comments and an outline of the topics to be discussed and 
the time to be devoted to each topic by December 16, 2013. Submit a 
signed paper original and eight (8) copies or an electronic copy. A 
period of 10 minutes will be allotted to each person for making 
comments. An agenda showing the scheduling of the speakers will be 
prepared after the deadline for receiving outlines has passed. Copies 
of the agenda will be available free of charge at the hearing.

Drafting Information

    The principal author of these regulations is Timothy Jones, Office 
of Associate Chief Counsel (Financial Institutions and Products), IRS. 
However, other personnel from the IRS and the Treasury Department 
participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by removing 
the entry for Sec.  1.148-6 and revising the entry for Sec. Sec.  
1.148-0 through 1.148-11 to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Sections 1.148-0 through 1.148-11 also issued under 26 U.S.C. 
148(i). * * *

0
Par. 2. Section 1.148-0 is amended by adding entries to paragraph (c) 
for Sec. Sec.  1.148-3(i)(3) and 1.148-11(k) and (l) and revising Sec.  
1.148-11 section heading to read as follows:


Sec.  1.148-0  Scope and table of contents.

* * * * *
    (c) * * *


Sec.  1.148-3  General arbitrage rebate rules.

* * * * *
    (i) * * *
    (3) Time and manner for requesting refund.
* * * * *


Sec.  1.148-11  Effective/applicability dates.

* * * * *
    (k) [Reserved]
    (l) Additional arbitrage guidance updates.
    (1) [Reserved]
    (2) [Reserved]
    (3) [Reserved]
    (4) Application.
0
Par. 3. Section 1.148-3 is amended by adding paragraph (i)(3) to read 
as follows:


Sec.  1.148-3  General arbitrage rebate rules.

* * * * *
    (i) * * *
    (3) Time and manner for requesting refund--(i) An issuer must 
request a refund of an overpayment no later than the date that is 2 
years after the final computation date for the issue to which the 
overpayment relates (the filing deadline). The request must be made 
using the form provided by the Commissioner for this purpose.
    (ii) The Commissioner may request additional information to support 
a refund request. The issuer must file the additional information by 
the date specified in the Commissioner's request which date may be 
extended by the Commissioner if unusual circumstances warrant.
    (iii) A claim described in either paragraph (i)(3)(iii)(A) or 
(i)(3)(iii)(B) of this section that has been denied by the Commissioner 
may be appealed to the Office of Appeals under this paragraph 
(i)(3)(iii). Upon a determination in favor of the issuer, Appeals must 
return an undeveloped case to the Commissioner for further 
consideration of the substance of the claim.
    (A) A claim is described in this paragraph (i)(3)(iii)(A) if the 
claim is filed after the filing deadline.
    (B) A claim is described in this paragraph (i)(3)(iii)(B) if it is 
a claim for which additional information satisfactory to the 
Commissioner is not submitted within the time specified in the request 
for information or any extension of such specified time period.
* * * * *
0
Par. 4. Section 1.148-11 is amended by revising the section heading and 
adding paragraphs (k) and (l) to read as follows:


Sec.  1.148-11  Effective/applicability dates.

* * * * *
    (k) [Reserved]
    (l) Additional arbitrage guidance updates. (1) [Reserved]
    (2) [Reserved]
    (3) [Reserved]
    (4) Application. (i) Section 1.148-3(i)(3)(i) applies to refund 
claims arising from an issue of bonds to which Sec.  1.148-3(i) applies 
and for which the final computation date is after June 24, 2008. For 
purposes of this paragraph (l)(4), issues for which the actual final 
computation date is on or before June 24, 2008, are deemed to have a 
final computation date of July 1, 2008.
    (ii) Section 1.148-3(i)(3)(ii) and (iii) apply to refund claims 
arising from an issue of bonds to which Sec.  1.148-3(i) applies and 
for which the final computation date is after September 16, 2013.

Beth Tucker,
Deputy Commissioner for Operations Support.
[FR Doc. 2013-21879 Filed 9-13-13; 8:45 am]
BILLING CODE 4830-01-P